Sometimes freight can be damaged, lost, or stolen while being transported to its destination. If you ship valuable items, you need to protect them and your business as a carrier. How can you do that? You can do that by getting carrier liability or freight insurance. Here we will elaborate on the difference between the two.

Carrier Liability:

Before we proceed with the differences, let us first understand both terms. Carrier liability is the amount of responsibility a carrier offers to cover up in case of damages and lost items. The carrier will cover the financial loss for a limited amount of items. Carriers usually do not cover natural disasters and shipper damages.  

Freight Insurance:

Freight insurance helps you cover losses that occur during the shipping process. Insurance is an additional cost but is a great option. It enables you to protect your valuable items. Unlike carrier liability, freight insurance covers damages caused by natural disasters. 

Differences Between Liability and Insurance:

Some companies use these terms interchangeably, but they are not the same thing. Here are some key differences between carrier liability and freight insurance.

• For freight insurance, you have to pay an additional fee. In the case of carrier liability, there is no extra fee.
• You need to demonstrate that the loss was the carrier’s fault with carrier liability. But with cargo insurance, you can skip this part and prove that loss occurred.
• Carrier liability doesn’t cover natural disasters such as war, earthquakes, tsunamis, but insurance covers them. 
• Your whole shipment is covered with freight insurance, but carrier liability will only cover a particular amount per pound of cargo.  

Differences In The Claims Process:

If you have picked carrier liability,

• You need to register a claim within nine months of delivery.
• If the delivery receipt wasn’t notified as damaged, you need to report it immediately.
• Both proofs of value and loss are needed in the claim.
• The carrier has to address the claim within 30 days.
• He is also required to respond to it within three months.
• To file an effective claim, you have to prove carrier negligence, saying that you shipped the packages correctly, but customers received damaged goods.

If a shipment is covered by cargo insurance:

• You need to attach proof of value and loss.
• Claims are addressed and paid within 30 days.
• You don’t necessarily need to prove carrier negligence.

Best Option for You:

Now that you know the difference, how can you decide which option is the best for you? The decision depends on the risks you want to take and the cost of your products. Freight insurance will suit you if you deal with high-cost products with greater risk.

If you deal in inexpensive products with reduced risk, carrier liability is a much more viable option. 

FAQs

Q- What is the carrier limit of liability?

In case of freight damage, loss, or stolen goods, every carrier bears a maximum amount of money to compensate for the losses. The limit varies for different companies.

Q- Who is carrier liability insurance for?

The purpose of carrier liability policies is to protect carriers and not shippers. If shippers rely on carrier liability policies to protect their businesses from cargo theft, damage, and loss—they’re exposed. 

Conclusion:

If you have always been confused with carrier liability and freight insurance, we hope that this article has cleared up your concept. Now you can make an informed decision based on the goods you deal with. Visit Gillson Solutions now for more information.